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Analysis of the Price Subsidy Policy for Renewable Energy on Economic Growth and Environmental Quality in Iran: A DSGE Approach
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Nazanin Azim1   , Zahra Dehghan shabani *2 , Ebrahim Hadian1 , Mahboubeh Jafari1 |
1- Shiraz University
2- Shiraz University , zdehghan@shirazu.ac.ir |
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Abstract: (1363 Views) |
| This research investigates how government price subsidies for renewable energy affect Iran’s economic growth and environmental sustainability using a Dynamic Stochastic General Equilibrium (DSGE) model. The study incorporates technological shocks in energy sectors and total productivity to assess their impact on key variables, including output, consumption, investment, emissions, and energy composition. Findings reveal that subsidies lower clean energy costs, boosting short-term consumption and investment while shifting resources toward greener technologies. The policy increases household disposable income, curbs fossil fuel use, and reduces greenhouse gas emissions. Additionally, renewable energy shocks demonstrate more stable and positive effects on both economic and environmental outcomes compared to fossil fuel shocks. By incentivizing clean energy adoption, subsidies gradually enhance environmental quality and support the transition to a low-carbon economy. The study concludes that price subsidies are an effective policy tool for balancing economic and ecological goals in fossil fuel-reliant nations like Iran, promoting sustainable development without compromising growth. |
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| Keywords: Renewable energies, economic growth, technological shocks, environmental quality, DSGE model, subsidy. |
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Full-Text [PDF 2444 kb]
(622 Downloads)
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Type of Study: Thesis(PhD.) |
Subject:
Environment
Received: 2025/08/11 | Accepted: 2025/10/28 | Published: 2026/04/30 | ePublished: 2026/04/30
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